Compute the net present value of each project

Assignment Help Accounting Basics
Reference no: EM131781256

Doug's Custom Construction Company is considering three new projects, each requiring an equipment investment of $23,100. Each project will last for 3 years and produce the following net annual cash flows.

Year AA BB CC
1 $7,350   $10,500   $13,650  
2 9,450   10,500   12,600  
3 12,600   10,500   11,550  
Total $29,400   $31,500   $37,800  

The equipment's salvage value is zero, and Doug uses straight-line depreciation. Doug will not accept any project with a cash payback period over 2 years. Doug's required rate of return is 12%. Click here to view PV table.

(a) Compute each project's payback period. (Round answers to 2 decimal places, e.g. 15.25.)

Which is the most desirable project?

Which is the least desirable project?

(b) Compute the net present value of each project. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round final answers to the nearest whole dollar, e.g. 5,275. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Reference no: EM131781256

Questions Cloud

Activate the main rules on all devices : Given that the main CSS rules are in a file called main.css, the printer-friendly rules are in print.css, the mobile rules are in mobile.css, the tablet rules
Why is credit enhancement required in a securitization : What entity determines the amount of securities needed in a securitization?
Discuss about the asset-backed security : An asset-backed security has been credit enhanced with a letter of credit from a bank with a single A credit rating.
Need a list of running processes : Need a list of running processes. The list should include only process names, IDs, VM, and PM columns. Put the list into an HTML-formatted
Compute the net present value of each project : Compute the net present value of each project, Dougs Custom Construction Company is considering three new projects
What types of remediation efforts would be made : What types of remediation efforts would be made to bring the employee into compliance? All references and citations used must be in APA style.
Evaluate the organizations productivity : Evaluate the organizations productivity. Explain how you will use the metric in evaluating productivity, and how the data will help measure the potential
Which structure would receive a higher credit rating : A corporation is considering a securitization and is considering two possible credit enhancement structures backed by a pool of automobile loans.
Who should ultimately pay the transportation charges : When the terms of sale are FOB shipping point, who should ultimately pay the transportation charges

Reviews

Write a Review

Accounting Basics Questions & Answers

  Allegiance inc has 129000 of inventory that suffered minor

allegiance inc. has 129000 of inventory that suffered minor smoke damage from a fire in the warehouse. the company can

  Prepare a sales budget for january-february

Prepare a sales budget for January, February, and March. Prepare a production budget for January, February, and March. Prepare a purchases budget for January, February, and March. Prepare a direct labor budget for January, February, and March.

  What is the face value of the bond

On July 1, 20X4, MPT bought 100,000 of General Company Inc.'s bonds for $250,000 plus brokerage costs of $145. What is the face value of the bond

  Construction contracted to build a bridge

Dalton construction contracted to build a bridge for $5,000,000. Construction began in 2010 and was completed in 2011. Data relating to construction are:

  The boeing company please respond to the following discuss

the boeing company please respond to the following discuss whether you agree or disagree with the smoothing treatment

  Wat are the four basic financial statements what is the

what are the four basic financial statements? what is the primary purpose of each of the four basic financial

  Record the information in appropriate ledger accounts

Record the above information in appropriate ledger accounts including balances at beginning. Create extra accounts as necessary (either T or three column)

  Assuming a 40 statutory tax rate applies to all years

assuming a 40 statutory tax rate applies to all years involved which of the following situations will give rise to

  Evaluating woodlawn racetrack for a potential loan

You are evaluating Woodlawn Racetrack for a potential loan. An examination of the notes to the financial statements indicates restricted cash at year-end amounts to $100,000. Explain how you would use this information in evaluating Woodlawn's liq..

  What is portland porcelain work coffee mug division turnover

What is The Portland Porcelain Works Coffee Mug Division capital turnover? For the most recent year, Robin Company reports operating income of $650,000. Robin's sales margin is 10%, and capital turnover is 2.0. What is Robin's return on investment ..

  Jasper company has 30000 shares of 80 par value 5

jasper company has 30000 shares of 80 par value 5 cumulative preferred stock and 140000 shares of 20 par value common

  What is the project npv

Question - The ABD Company is considering buying a new machine for one of its factories, what is the project's NPV

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd